As the battle over how to pay for the Biden Administration budget continues on Capitol Hill, much of the focus has been on the wealthy. A new annual tax on billionaires' unrealized capital gains is the latest suggestion to help pay for the nearly $2 trillion bill. Under current law, every property owner, regardless of income, pays tax on assets when they realize a gain from them, usually by selling them. This so-called wealth tax, however, would force the ultra-wealthy to pay tax on the value or their holdings, stocks as well as real estate, before realizing the gains. It... Read more →
Photo by SHVETS production from Pexels A cell phone provider's television ad that's on heavy rotation here in the Austin area touts that it has no added fees or taxes. What it really means is that those charges, aside from sales tax, are included in the price of whatever company plan you choose, rather than listed as separate line items in your monthly bills. So, despite that Mad Men-style ad sleight of hand, you're going to pay taxes, fees, and state and local government surcharges for your mobile phone services. And you're paying more than ever toward these amounts. Taxes... Read more →
The Child Tax Credit (CTC) was expanded as part of the COVID-19 relief bill signed into law by President Joe Biden. Instead of $2,000 per child, the CTC in for the 2021 tax year is $3,600 per child age 5 or younger. It's $3,000 for children ages 6 to 17. Part of the 2021 credit money is going out through the end of the year as advance payments. The October payments went out last Friday. Two more rounds, on the 15th of November and December, will be issued. Few of us will turn down money, so the credit increase and... Read more →
One of my favorite Lyle Lovett songs is "What Do You Do/The Glory of Love," where the Houston singer-songwriter shares the vocal spotlight with the incomparable Francine Reed. The lyric that initially caught my ear and makes me chuckle every time I hear it goes, "If you make all that money man, make damn sure it shows." That's a great exchange in a duet, but such showiness raised suspicions about a Dallas-area accountant accused of defrauding the COVID-19 Paycheck Protection Program (PPP). PPP fraud guilty plea: Steven Jalloul was indicted in September 2020 on charges he orchestrated a fraudulent scheme... Read more →
Photo by ivan sellar from Pexels You're finally ready to give up being the boss. Or maybe you got a great offer for your business. Or maybe the COVID-19 pandemic did a number on you and your company. Whatever your reason, you've decided it's time to close your company's doors. Make sure that during that process, you take taxes into account. The Internal Revenue Service offers these tips to business owners who've decided to call it quits. File the appropriate final return: This filing is for the year you close your business. The type of return you file, and the... Read more →
Photo by Liza Summer from Pexels Everyone needs help now and then. That truism especially applies to filing taxes. But not everyone can afford to hire a tax professional. That's where the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs come into play. For decades, these two programs have provided free tax preparation and filing assistance during the annual filing season to millions of lower- and middle-income taxpayers, as well as elderly filers. The Internal Revenue Service just announced its financial support for 334 VITA and TCE programs in 2022. Now the agency is looking... Read more →
This has been a wonderful weather week here in the Austin area. Nights have been cool. Days have topped out in the seasonal upper 70s. But today is a tad warmer, a trend expected to continue through October. So it's goodbye to our brief autumn in Central Texas, and back to closing windows and cranking up the air conditioner. Don't get me wrong. I'm not complaining. Although it was hot this summer, it wasn't the hottest since we moved here 16 years ago. And after February's devastating ice storm, I'm never complaining about warm or warmer than normal or hot... Read more →
Millions of Americans rely on their workplace benefits to cover then health care and other needs. Most of them also are paying even more attention to those job-based benefits this year in light of the persistent COVID-19 pandemic. Medical insurance is a top priority. But other benefits also are getting added attention during this annual fall period, during which many U.S. companies allow workers to enroll in or change their benefits for the coming coverage year. Many of the office-based benefits also offer some tax advantages. Here are five questions with an Internal Revenue Service-inspired perspective to ask yourself as... Read more →
Free tax-preparation and filing help is offered ever tax season through groups community groups nationwide, like this Volunteer Income Tax Assistance (VITA) program run by the Summit-Medina, Ohio, United Way. As the COVID-compromised 2020 and 2021 tax filing seasons demonstrated, most taxpayers needed some help to make sure they got all the tax breaks they were entitled to, as well as just file their annual returns. That need for tax assistance isn't going away, even if we do (fingers and toes tightly crossed) get to a more normal tax season next year. And volunteers who've received the Internal Revenue Service... Read more →
Lewis Hamilton visiting fans at the 2018 Formula 1 British Grand Prix at Silverstone (Photo by Jen_ross83) It's the greatest time of the year for sports fans as a variety of games and events overlap. College and professional football games fill up our weekends, and for the National Football League (NFL) our Mondays and Thursdays. Pucks have dropped in National Hockey League (NHL) arenas. The National Basketball Association (NBA) preseason will give way next week to match-ups that count. And, of course, four Major League Baseball (MLB) teams are facing off to determine which two will make it into the... Read more →
Hurricane Ida is one reason why some taxpayers don't have to get their extended tax returns to the IRS on Oct. 15. (National Hurricane Center radar image of Ida making landfall) Millions of taxpayers are frantically filling out Internal Revenue Service forms right now. They are the folks who got an extension until today, Oct. 15, to submit their annual federal tax returns. Some, however, aren't in a hurry. The IRS has given them more time to complete their returns. Disaster related added delays: Unfortunately for those filers, the reason for an extended extension deadline isn't a welcome one. They... Read more →
Photo by Tima Miroshnichenko from Pexels It's Tax Day. For real. October 15. The absolutely final day to get your 1040 (and other forms, schedules, and attachments) to the Internal Revenue Service or face potential penalties for late filing. You also could be hit with late payment charges if you didn't pay enough when you got your extension to file, not extension to pay, months ago. I've been here. Not this year, thankfully, but in the past. It's nerve wracking. But you still have time. So take a breath and let's get this done. Hurry up if you're going old... Read more →
The Social Security Administration (SSA) gave retirees and other recipients of the program's payments good news this week. Next year, they'll bet the biggest benefits bump in decades. Some higher earners, however, aren't so happy. That government benefits announcement also noted that the amount of income subject to payroll taxes also is going up in 2022. This amount, known as the Social Security wage base, is the maximum earnings, by both salaried workers and the self-employed, that are subject to that retirement portion of the Federal Insurance Contributions Act (FICA) tax. In 2021, the wage base is $142,800. On Jan.... Read more →
Many Social Security recipients are celebrating the announcement that their benefits will increase in 2022. But if you get other income to help you enjoy your retirement, you could owe tax on your government benefits. There's some good news for the around 72 million people who receive Social Security benefits, either as retirees or Supplemental Security Income (SSI) recipients (or both). The Social Security Administration announced* on Wednesday, Oct. 13, that they will see a 5.9 percent increase in their benefit checks in 2022. It's the largest increase to the government benefits, which primarily go to retirees, in nearly four... Read more →
Did you discover when you filed your taxes, either earlier this year or this week to get in under the Oct. 15 extended deadline, that you were due a refund? Or, yikes, that you owed Uncle Sam? Either way, now is a good time to review your tax withholding. With 2021's third quarter just under way, you have plenty of time to deal with the differences either way. And there is enough time left in the year to spread the changes over several pay periods so they don't produce a major shock either way to your budget. Rationalizing over-withholding: Around... Read more →
Welcome to another Monday federal holiday. Today is Columbus Day. It's not necessarily manic, unless you're spending it finally finishing your 2020 tax return that you got extended until Oct. 15. In that case, this post for tax procrastinators might help. As with many — OK, all — retailers use these three-day federal holidays as reasons for sales. And usually tacky TV commercials. Got your mattress bargain yet? Then there are the associated celebrations. Parades. The coronavirus-delayed Boston Marathon this year. Myriad special events nationwide honoring special people associated with day or its origins or its namesake. Evolving views of... Read more →
Fans of peer-to-peer payment apps are worried that a proposed $600 bank account reporting threshold will affect their transactions. It won't. The U.S. tax system is based on voluntary compliance by taxpayers. But the Internal Revenue Service wasn't born yesterday. It knows full disclosure by all taxpayers is a pipe dream. That's why the agency relies on, and pushes for, increased third-party notifications. That's where taxable transactions are reported not only to the taxpayers, but also the IRS. The most common situation is the W-2 annual wage statement, but there are plenty of others. The latest instance of third-party reporting... Read more →
The tax voyeur in all of us enjoyed the latest unsurprising revelations of how rich people hide money around the world, including a dozen U.S. states and D.C., to avoid paying taxes. The attention to this not really news item also is a good time to note the difference between illegal tax evasion and legal tax avoidance. The South Dakota capitol building is in the state's capital city of Pierre. The state itself is the U.S. capital as far as the most trusts identified in the Pandora Papers. (Photo by Jake DeGroot via Wikipedia) Last week we got news that... Read more →
Photo by Nataliya Vaitkevich from Pexels Hello, ultimate tax procrastinators. You now have just a week to finish your Form 1040 and get it to the Internal Revenue Service. A piece of cake for all y'all who push thing to the last minute, right? Ooooh-kaaaay. It's your tax life … and possible tax costs if you mess up anything or, yikes, miss this due date. But just in case you're open to a little at-the-wire tax filing advice, here are six questions, and some answers from me, to ask yourself in these last seven days until Oct 15. 1. Do... Read more →
Saving is a key component to reaching financial independence. However, for individuals facing added challenges, putting aside money for the future can be difficult. Achieving a Better Life Experience, or ABLE, accounts were created in 2014 to help in these cases. They are tax-advantaged savings accounts for individuals with disabilities (and their families) to help them maintain their health, independence, and quality of life. While money put into ABLE accounts isn't tax-deductible, the distributions are tax-free when they are used to pay qualified disability-related expenses. Here are some key questions and answers about ABLE accounts. Who is eligible for an... Read more →